Varsha Swantuka, Cuttack V. ACIT, Cuttack

ITSSA 40/CTK/2012

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8172 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 23-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 27-04-2012
• Court: TRIBUNAL
• Department Lawyers: M R
• Assessee Lawyers: P S PANDAKAMAL AGARWALLA ARS
• Keywords: Search and seizure
• Section: 153A; 194C; 132; 139

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM IT (SS) A NO. 40/CTK/2012 (ASSESSMENT YEAR 2007 - 08) SMT. VARSHA SANTUKA, JAGATPUR, CUTTACK. VERSUS ASST.COPMMISSINER OF INCOME - TAX , CIRCLE 1(1), CUTTACK. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI P.S.PANDA/KAMAL AGARWALLA,ARS FOR THE RESPONDENT SHRI M.R.PANIGRAHI, CIT - DR DATE OF HEARING : 23.05.2012 DATE OF PRONOUNCEMENT : 29.06.2012 ORDER SHRI K.K.GUPTA, AM : T HE ASSESSEE IS IN APPEAL ON A SOLITARY ISSUE WHICH READS AS UNDER : ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. CIT (A) HAS ERRED INCONFIRMING THE ORDER OF THE LD. A.O. WHO HAS WRONGLY CONSIDERED 36,33,642 AS SUPPRESSION OF RECEIPT BEING REIMBURS EMENT OF FREIGHT CHARGES PAID TO RAILWAY ON BEHALF OF M/S. PHOOLCHAND EXPORTS LTD. BASED ON TDS CERTIFICATE WHICH INCLUDES THE ABOVE AMOUNT WITHOUT CONSIDERING THE CORRESPONDING PAYMENTS MADE TO RAILWAY. 2. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS SUBMITTED THE BRIEF FACTS AS FOLLOWS : THE ASSESSEE IS AN INDIVIDUAL RUNNING HER BUSINESS IN THE NAME & STYLE OF M/S VARSHA TRADING CO. THE RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FILED ON 01.10.2007 SHOWING GROSS TOTAL INCOM E AT 4,57,092. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT., 1961, WAS CARRIED OUT IN THE BUSINESS AND RESIDENTIAL PREMISES OF THE APPELLANT ON 26.06.2008. IN RESPONSE TO NOTICE U/S 153A OF THE INCOME TAX ACT., 1961, THE RETURN FOR THE AF ORESAID YEAR WAS FILED ON 01.01.2009 DISCLOSING THE EQUIVALENT AMOUNT AS SHOWN IN THE ORIGINAL RETURN FILED U/S 139 OF THE INCOME TAX ACT.,1961. WHILE COMPLETING THE ASSESSMENT THE AO MADE ADDITION OF 36,33,642 BEING THE DIFFERENCE BETWEEN THE AMOUNT MEN TIONED IT(SS)A NO.40/CTK/2012 2 IN THE TDS CERTIFICATES AND THAT SHOWN AS INCOME INTER ALIA WITH THE FOLLOWING REASON I) NO EVIDENCE HAS BEEN PRODUCED IN SUPPORT OF THE CONTENTION OF THE ASSESSEE THAT SHE HAD MADE PAYMENTS OF RAILWAY FREIGHT ON BEHALF OF MIS. PHULCHAND EXPORT LT D . DEDUCTION OF TAX AT SOURCE U/S. 194C BY M/S. PHUL CHAND EXPORT LTD. ITSELF CLEARLY CONTRADICTS THE CONTENTION OF THE ASSESSEE THAT THE DISCREPANCY REPRESENTS FREIGHT CHARGES REIMBURSED BY THAT COMPANY. II) THE ASSESSEE HAS FILED A COPY OF THE LEDGER ACCO UNT OF MIS. PHUL CHAND EXPORT LTD. IN HER LEDGER WHEREIN THERE ARE CERTAIN DEBITS ON ACCOUNT OF RAILWAY FREIGHT TO THE COMPANY. TH IS LEDGER COPY IS MERELY A SELF SERVING EVIDENCE, ESPECIALLY WHEN NO CONFIRMATION OF ACCOUNTS COULD BE FILED FROM M /S. PHULCHAND EXPORT LTD. III) PRESUMING THAT THE LEDGER COPY REFLECTS THE TRANSACTIONS BETWEEN M/S.PHUL CHAND EXPORT LTD. AND THE ASSESSEE TRUTHFULLY, THE TOTAL FREIGHT CHARGES DEBITED TO THE COMPANY AMOUNT TO 35,00,387 ONLY AS AGAINST THE ALLEGED REIMBURSEMENT OF FREIGHT CHARGES OF 36,33,642. THERE IS NO EXPLANATION FOR THIS APPARENT DISCREPANCY BETWEEN THE AMOUNT WHICH THE ASSESSEE SEEKS TO EXPLAIN AND THE AMOUNT ACTUALLY DEBITED IN THE LEDGER ACCOUNT. IV) THERE HAS BEEN NO CONFIRMATION FROM N/S. PHULCHAND EXPORT LTD.. WITH REGARD TO THE CLAIM OF THE ASSESSEE THAT THEY HAD WRONGLY DEDUCTED TAX AT SOURCE FROM FREIGHT CHARGES REIMBURSED. V) THE ASSESSEE HAS CLAIMED CREDIT FOR THE TDS ON THE ENTIRE AMOUNT OF R ECEIPTS OF 99,63, 131 THOUGH RECEIPTS TO THE EXTENT OF 63,29,489 ONLY HAVE BEEN CREDITED TO THE P&L ACCOUNT. AS PER PROVISIONS OF SECTION 199 ONCE CREDIT FOR TDS IS CLAIMED THE CORRESPONDING RECEIPTS ARE TO BE OFFERED FOR TAXATION AS INCOME. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER ADD ED THE THE DISCREPANCY OF 36,33,642 BEING RECEIPTS NOT DISCLOSED IN THE PROFIT & LOSS ACCOUNT IS TO BE TO THE TOTAL INCOME. HE DID NOT ALLOW ANY DEDUCTION ON ACCOUNT OF ANY EXPENSES RELATING TO THE SAME OBSERVING THAT SINCE ALL T HE EXPENSES INCURRED FOR THE BUSINESS HAVE ALREADY BEEN CLAIMED IN THE P & L ACCOUNT AND THERE IS ALSO NO CLAIM FROM THE SIDE OF THE ASSESSEE TO ALLOW ANY FURTHER EXPENDITURE. 3. AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE CIT(A). BEFORE HIM, THE ASSESSEE SUBMITTED THE COPY OF THE CERTIFICATE CONFIRMING THE ABOVE TRANSACTION OF REIMBURSEMENT OF EXPENSES WHICH COULD HAVE ALSO BEEN SUBMITTED BEFORE THE A.O. IF THE SAME WOULD HAVE BEEN ASKED FOR. HOWEVER, IT(SS)A NO.40/CTK/2012 3 IGNORING THE SUBMISSION FILED BEFORE THE ID. CIT (A), H E CONFIRMED THE ORDER OF THE A.O. ON THE FOLLOWING OBSERVATIONS. - THE CLAIM OF THE APPELLANT IS THAT SHE HAD DEPOSITED 35,00,387 WITH RAILWAY DEPARTMENT ON BEHALF OF PHULCHAND EXPORTS LTD. THE FACT REMAINS THAT THERE EXISTS A DIFFERENCE OF 36,33,642 BE TWEEN THE GROSS RECEIPTS SHOWN IN THE P&L A/C. AND THE GROSS RECEIPTS FROM WHICH TDS HAS BEEN MADE AS PER THE TDS CERTIFICATES. - THE APPELLANT HAS CLAIMED CREDIT FOR THE TDS ON THE ENTIRE AMOUNT OF RECEIPTS OF 99,63,131 THOUGH RECEIPTS OF 63,29,489 HAV E BEEN CREDITED TO THE P&L A/C. SECTION 199 PROVIDES THAT ANY DEDUCTION MADE WITH THE PROVISIONS OF CHAPTER - X VII AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME THE DEDUCTION WAS MADE AND C REDIT SHALL BE GIVEN TO HIM FOR THE AMOUNT SO DEDUCTED ON THE PRODUCTION OF THE CERTIFICATE FURNISHED U/S.203 IN THE ASSESSMENT MADE FOR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE. A PERUSAL OF THE WRI TTEN SUBMISSION FILED BY THE AR BEFORE TH E AO ON 28.12.2010 CLEARLY SHOWS THAT RELIANCE WAS PLACED BY HIM ON LEDGER COPY OF THE PARTY AND FREIGHT PAID. THERE IS MERIT IN THE FINDING OF THE AO THAT THE LEDGER COPY IS MERELY A S E LF - SERVING EVIDENCE, ESPECIALLY WHEN NO CONFIRMATION OF ACCOUNTS COULD BE FILED FROM M/S. PHUICHAND EXPORTS LTD. IN CIT V. CALCUTTA AGENCY LTD. (1951) 19 ITR 191 (SC), IT WAS HELD THAT THE BURDEN OF PROVING THE NECESSARY FACT IN ORDER TO ENTITLE THE ASSESSEE TO CLAIM EXEMPTION WAS ON THE ASSESSEE. THE DELHI BENCH OF THE HO NBL E ITAT IN ITO V. DR. WILLMAR SCHWABE INDIA (P) LTD. (2005) 3 SOT 71 EXAMINED THE SCOPE OF CIRCULAR NO.715 DATED 08.08.1995 ON THE SUBJECT OF DEDUCTION OF TAX AT SOURCE ON EXPENSES REIMBURSEMENT AND UPON PERUSAL OF THE SAME, HELD THAT REIMBURSEMENT OF E XPENSES FOR WHICH BILL IS RAISED DID NOT ATTR ACT THE PROVISION OF SECTION 1 94J. 4. AGGRIEVED, THE ASSESSEE IS IN THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT IS A FACT THAT AS AGAINST 99,63,131 SHOWN AS RECEIPT IN THE TDS CERTIFICATE, THE ASSESSEE HAS SHOWN A SUM OF 63,29,489 AS INCOME IN THE PROFIT & LOSS ACCOUNT RESULTING A DIFFERENCE OF 36,33,642 WHICH BOTH THE A.O. AND LEARNED CIT(A) CONSIDERED AS SUPPRESSION OF INCOME. THE DIS CREPANCY WAS FOUND DUE TO REIMBURSEMENT OF EXPENSES WHICH WAS NEITHER SHOWN AS INCOME NOR THE PAYMENTS MADE WERE SHOWN AS EXPENDITURE. IN SUPPORT T HE DETAILS OF PAYMENT IN THE NATURE IT(SS)A NO.40/CTK/2012 4 OF RAILWAY FREIGHT IS PLACED IN THE PAPER BOOK AT PAGE N O S . 20 TO 30. WHI LE PASSING THE ORDER, THE AO MADE THE ABOVE ADDI TION WITH A CONTENTION THAT NO CONFIRMATION FROM THE ABOVE PARTY WERE PRODUCED. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE SAME WAS NEVER ASKED FOR DURING THE ASSESSMENT PROCEEDINGS. THE ADDITION WAS M ADE WITH A PREDETERMINED NOTIONS AND THE CONTENTION TAKEN WAS MERELY A GROUND. FURTHER, HE SUBMITTED THAT D URING THE COURSE OF HEARING BEFORE THE LEARNED CIT(A) THE ASSESSEE SUBMITTED A CONFIRMATION LETTER ( PB PAGE 18) AND ALSO EXPLAINED WHY THE EXCESS AMO UNT SHOWN IN THE TDS CERTIFICATES HAS NOT BEEN CONSIDERED A INCOME. FURTHER THE LD. CIT(A) CONFIRMED THE ADDITION SUPPORTING THE VIEW OF AO WHO TOOK THE CONTENTION THAT THE DOCUMENTS FILED IS MERELY A SELF SERVICING EVIDENCE, ESPECIALLY WHEN NO CONFIRMATIO NS OF ACCOU NTS COULD BE FILED FROM M/S PHUL CHAND EXPORTS (P) LTD. IS NOT CORRECT. DURING THE ASSESSMENT PROCEEDINGS, THE LD. A.O. HAD NEVER ASKED FOR ANY CONFIRMATION FROM THE PARTY AND MADE THE ADDITIONS. BEFORE THE LD. CIT(A), THE APPELLANT FILED THE CON FIRMATION ALONG WITH THE CERTIFIED LEDGER COPY WHICH WAS IGNORED BY HIM AND THE FACT OF THIS IS NOT FIND PLACE IN THE ORDER. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT DURING THE YEAR THE ASSESSEE HAD DEPOSITED RAILWAY FREIGHT AND INCURRED OTHER INCIDEN TAL EXPENSES AGGREGATING 35,00,386 ON BEHALF OF M/S PHUL CHAND EXPORTS (P) LTD. AGAINST WHICH THE PARTY MADE THE PAYMENT. HOWEVER, WHILE REIMBURSING THE ABOVE EXPENDITURE TO THE ASSESSEE , THE PARTY MADE TDS WHICH IS THE MATTER OF DISPUTE. DURING THE ASSESS MENT PROCEEDINGS THE ASSESSEE HAD ALSO PRODUCED THE BOOKS OF ACCOUNTS WHEREIN THE ABOVE EXPENDITURE INCURRED ON BEHALF OF THE PARTY WAS NOT FOUND TO BE CLAIMED . HE SUBMITTED THAT IF THE ABOVE REIMBURSEMENT OF EXPENDITURE IS CONSIDERED AS INCOME THEN BOTH T HE A.O. AND LEARNED CIT(A) SHOULD HAVE GIVEN BENEFIT FOR EXPENDITURE INCURRED. FURTHER, IT WAS SUBMITTED IT(SS)A NO.40/CTK/2012 5 THAT THE REIMBURSEMENT OF EXPENDITURE WAS 35,00,387 WHERE AS THE DIFFERENCE BETWEEN THE INCOME SHOWN AND TOTAL AMOUNT ON WHICH TDS MADE WAS 36,33,642 ( 99,63,131 - 63,29,489) WAS BECAUSE OF TDS BEING MADE ON PAYMENT AS WELL AS THE OUTSTANDING LAST BILL. THE ASSESSEE HAS ENCLOSED THE ACCOUNT STATEM ENT RECEIVED FROM M/S PHULCHAND EXPORTS (P) LTD. IN THE PAPER BOOK AT PAGE NO. 18 & 19. FROM THE ENCLOSED STATEMENT OF ACCOUNT, THE HONBLE BENCH WILL NOTICE THAT THE TDS HAS BEEN MADE ON TOTAL PAYMENT OF 66.00 LACS MADE DURING THE YEAR AND ON ONE BILL O F 14,87,065. THE SAME IS ALSO EVIDENT FROM TDS CERTIFICATES, COPIES OF WHICH ARE ENCLOSED IN THE PAPER BOOK AT PAGE NO. 31 & 32 RESPECTIVELY. AS AGAINST WHICH TOTAL CREDIT DURING THE YEAR WAS 79,47,310 RESULTING A DIFFERENCE OF 1,33,256 ( 66,00,000+ 14, 80,566 - 79,47,310). THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE CASE LAWS RELIED ON BY THE LEARNED CIT(A) ARE NOT RELEVANT. HE RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. SIEMERS AKTIONGESELLSCHAFT (2009) 177 TAXMAN N (BOM) FOR THE PROPOSITION THAT THE AMOUNT RECEIVED BY THE ASSESSEE BY WAY OF REIMBURSEMENT COULD NOT REGARDED AS REVENUE RECEIPT PARTICULARLY WHEN THE TRIBUNAL HAD FOUND THAT THE ASSESSEE HAD RECEIVED NO SUMS IN EXCESS OF THE EXPENSES INCURRED AND THEREF ORE, THE IMPUGNED AMOUNT WAS NOT LIABLE TO TAX IN THE HANDS OF THE ASSESSEE. ALSO HE RELIED N THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. INDUSTRIAL ENGINEERING PROJECTS (P) LTD (202 ITR 1014) FOR THE PROPOSITION THAT REIMBURSEMENT OF EX PENSES CAN, UNDER NO CIRCUMSTANCES, BE REGARDED AS REVENUE RECEIPT. 6 . IN SUPPORT OF HIS CONTENTION, THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILED A PAPER BOOK WHICH INTER ALIA INCLUDES THE COPY OF THE FINANCIAL STATEMENTS INDICATING THAT THE GROSS RECEIP TS ON WHICH TDS CLAIMED ALONG WITH THE RAILWAY FREIGHT ON WHICH THE DEDUCTOR ERRONEOUSLY DEDUCTED THE TDS IT(SS)A NO.40/CTK/2012 6 WAS NOT PART OF THE BILL RAISED BY THE ASSESSEE WHEN THE AMOUNT OWED BY THE DEDUCTOR TALLIES WITH THE AMOUNT OWED EXCEPT THE AMOUNT OF TDS WHICH THE D EDUCTOR SAYS HE DOES NOW. THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT SECTION 199 PROVIDES THAT THE TDS SO DEDUCTION HAS TO BE CLAIMED AGAINST INCOME RENDERED BY THE DEDUCTEE IN THE IMPUGNED ASSESSMENT YEAR AND NOT BECAUSE SOMEBODY HAS DEDUCTED TAX BU T EXPENSES REIMBURSED BY HIM WHICH WAS TECHNICALLY WRONG IN THE FIRST PLACE. THE PAYMENTS OF RAILWAYS WERE SUBJECTED TO TDS EITHER BY THE ASSESSEE OR THE DEDUCTION. THE CASE OF THE CIT(A) TO CONFIRM THE SAME AFTER HAVING APPRECIATED THE FACTS AS CRYPTIC IN SOFAR AS HOLDING THAT THE FINDING OF THE ASSESSING OFFICER THAT THE LEDGER COPY MERELY A SELF SERVING EVIDENCE SPECIALLY NO CONFIRMATION OF AMOUNTS WERE FILED FROM M/S.PHULCHAND EXPORTER S LTD., BECOMES CONTRADICTORY TO THE FINDINGS OF THE ASSESSING OFFICER WHEN THE FINANCIAL STATEMENTS FILED ALONG WITH THE RETURN AND INCOME AND VERIFIED BY IT INDICATES THAT THE SUM TOTAL AMOUNT OWED BY M/S.PHULCHAND EXP ORTERS LTD., AT 13,14,088. IT IS NOT THE CASE OF MISSTATEMENT THE FACTS AS INSCRIBED IN THE ACCOUNTS JUST BECAUSE AN AUTHORITY DOES NOT BELIEVE A DOUBLE ENTRY SYSTEM OF BOOK KEEPING. THE LEDGER COPY IS THE COPY OF BUSINESS TRANSACTION CONDUCTED WHICH BALA NCE FINALLY FINDS AS BALANCE IN THE BALANCE SHEET WHEN THE CERTIFICATE WAS OBTAINED ONLY TO SATISFY THE ANXIETY OF THE ASSESSING OFFICER. THE LEARNED CIT(A) THEREFORE ERRED IN DISMISSING THE ASSESSEES APPEAL WITHOUT REASONING OF THE FACTS AS OTHERWISE LEA N IN FAVOUR OF THE ASSESSEE. 7 . THE LEARNED CIT - DR SUBMITTED THAT THE ENDEAVOR OF THE ASSESSING OFFICER WAS TO RECONCILE THE TAX DEDUCTED AT SOURCE CLAIMED BY THE ASSESSEE IN THE INCOME RETURNED BY THE ASSESSEE ON THE BASIS OF GROSS RECEIPT INCORPORATED IN THE ACCOUNTS. THE ASSESSING OFFICER THEREFORE RIGHTLY HELD THE SUM OF 36,33,642 WERE RECEIPTS NOT DISCLOSED IN THE PROFIT & LOSS ACCOUNT IT(SS)A NO.40/CTK/2012 7 WAS TO BE CONSIDERED FOR TAXATION WHEN HE CHOSE TO GIVE CREDIT OF TDS AMOUNTING TO 2,23,572. THE BILLS RAISED BY T HE ASSESSEE WHICH WAS SUBJECTED TO TDS DID NOT TALLY WITH THE RECEIPTS SHOWN WAS RIGHTLY CONFIRMED BY THE LEARNED CIT(A). HE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW INDICATING THE COMPUTER GRANTING CREDIT ON THE BASIS TDS CERTIFICATE IS RETURNED BY T HE DEDUCTOR AS FORM 26 - AS WHICH WAS ON THE BASIS OF RECEIPTS FOUND AT THE TIME OF HEARING NOT TALLYING WITH THE RECEIPTS DISCLOSED. HE PRAYED THAT THE ORDERS OF THE AUTHORITIES BELOW BE SUSTAINED. 8 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. ON CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO FIND THAT THE CONTENTION OF THE LEARNED COUNSEL IS BASED ON FACTS WHEN THE ACTUAL FINDING THE MISSING RECEIPTS NOT ACCOUNTED FOR EMANATED FROM FACT T HAT A PARTICULAR TDS WAS NOT AGAINST INCOME AS PER THE P & L ACCOUNT FILED BY THE ASSESSEE. THE LEARNED COUNSEL HAS SUBMITTED BY WAY OF A PAPER BOOK THE FACTS AND HAS AGREED TO THE PROPOSITION , YES THAT THIS PARTICULAR ITEM OF TDS IS NOT SUPPORTED BY ANY INCOME TO BE RENDERED TO TAX AS PER THE FINDING OF THE ASSESSING OFFICER INSOFAR AS THE LEDGER COPY O THE ACCOUNT EXPLAINED THE AMOUNT OWED BY M/S.PHULCHAND EXPORTERS PVT. LTD WAS ON THE BASIS OF RAILWAY FREIGHT INCURRED BY THE ASSESSEE WHICH WAS DIRECTLY DEBITED TO THE SAID M/S.PHULCHAND EXPORTERS PVT. LTD WHEN HE PAID THE AMOUNT SUBJECT TO DEDUCTION OF TAX AT SOURCE. IN OTHER WORDS, THE RAILWAY FREIGHTS WERE BORNE BY THE ASSESSEE ON BEHALF OF M/S.PHULCHAND EXPORTERS PVT. LTD AND WAS CLAIMED IN THE LEDGER ACCOUNT AND NOT BY WAY OF EXPENDITURE. THE LEARNED COUNSEL SAYS THAT HAVING EXPANDED THE AMOUNT FROM PERCENTAGE OF TDS PERCENTAGE IT OUGHT TO HAVE LED TO THE FINDING THAT THE CORRESPONDING EXPENSES SHOULD HAVE BEEN ALLOWED WHEN THE FINDING WOULD BE THAT T HE RESULTANT PROFIT, IF ANY, IS ONLY THE TAX DEDUCTED AT SOURCE IT(SS)A NO.40/CTK/2012 8 BY THE DEDUCTOR. THE ASSESSEE CANNOT BE SAID TO HAVE MA DE THE PROFIT FROM RAILWAYS INSOFAR AS DUE TO PROVISIONS FOR RAILWAYS THE FREIGHT HAS TO BE PAID BY THE OWNER OF GOODS AND NOT THE CONTRA CTOR. THE RAILWAY RECEIPTS ARE DRAWN IN THE NAME OF HOLDER OF GOODS THEREFORE WERE DIRECTLY DEBITED TO THE SAID PARTY BEING THE CONSIGNOR ON WHOSE BEHALF THE ASSESSEE HAD UNDERTAKEN THE COMPOSITE CONTRACT FOR TRANSPORTATION. WE ARE THEREFORE OF THE CONSIDE RED VIEW THAT A HYPOTHETICAL FIGURE OF INCOME CANNOT BE THRUST UPON THE ASSESSEE MERELY BECAUSE THE TAX WAS DEDUCTED AT SOURCE BY THE DEDUCTOR ON THE PREMISE THAT THE EXPENSES REIMBURSED ON BEHALF OF THE DEDUCTOR COULD WHETHER BE SUBJECTED TO DEDUCTION OF TAX AT SOURCE WHEN THE TDS SO DEPOSITED DID NOT RENDER INCOME TO IT. IT WAS ONLY A PORTION OF THE AMOUNT OWED TO THE DEDUCTEE WHICH WAS PAID TO THE GOVERNMENT EXCHEQUER. THE ASSESSEE COULD THEREFORE ONLY CLAIM THIS AMOUNT BACK FROM DEDUCTOR AS ADJUSTMENT O F AMOUNT ON ACCOUNT OF RAILWAY FREIGHT TO BE BORNE BY THE DEDUCTOR BY FILING ITS RETURN UNDER THE PROVISIONS OF THE I.T.ACT FOR CLAIMING THE TAX PAID AS TDS HAS BEEN NOTED BY THE ASSESSING OFFICER. THE AMOUNT OWED TO M/S.PHULCHAND EXPORTERS PVT. LTD., THER EFORE STANDS FULLY RECONCILED TO THE FACT THAT THIS TRANSACTION HAS BEEN DENIED AS HAVING ANY MERIT BY THE LEARNED CIT(A). IN VIEW OF THE ABOVE AND IN VIEW OF THE FACTS CLARIFIED BY THE LEARNED COUNSEL FOR THE ASSESSEE AS MENTIONED ABOVE, WE ARE OF THE CON SIDERED VIEW THAT THIS ADDITION OF 36,33,642 IS BOUND TO BE DELETED AND IT IS DIRECTED TO BE DELETED. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNT ANT MEMBER DATE: 29.06.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. IT(SS)A NO.40/CTK/2012 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: SMT. VARSHA SANTUKA, JAGATPUR, CUTTACK. 2. THE RESPONDENT: ASST.COPMMISSINER OF INCOME - TAX , CIRCLE 1(1), CUTTACK. 3. TH E CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY. APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 25.06.2012 .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26.06.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..